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Airbus And Boeing Product Strategy  
User currently offlineKatekebo From United States of America, joined Apr 2001, 704 posts, RR: 6
Posted (7 years 10 months 1 week 1 day 2 hours ago) and read 6921 times:

While a lot of ink has been spent on this forum discussing the technical merits and advantages of A350 vs. B787, I would like to bring up the subject of product strategy of both manufacturers to meet customer needs in mid-term future (5-10 years).

Both manufacturers have the narrowbody market covered with very comparable products and both have expressed their intentions to develop new products for this market as new powerplants become available. Net, the narrowbody market is, and will remain in the future, a very tight competition with nearly 50/50 split.

On the VLA (500+ seat) market, Airbus is the only player. The business merits of the A380 are still on the table and only future will tell how profitable this adventure will be for Airbus.

Now, in the widebody market from 200 to 500 seats, Boeing is offering a complete range of products with B787, B777ER/LR and B747-8. In foreseeable future, the Y3 will replace the B777/B747, leaving Boeing with two product covering the entire range. In contrast, Airbus has only one competitive product there, the A330, as they already stopped sales of the A300, and the A340 is practically dead. The A350 instead of expanding Airbus offering, will replace their already best-selling product (A330) and potentially address the lower end of the A340 range.

My question is - can Airbus effectively cover the entire widebody market needs, all the way from 200 to 500 seats, with only one model. I don't think so, and it looks to me that Airbus product strategy has two huge holes in it, one on the lower end, leaving the B787-3 and -8 without competition, and another one on the high end of the range, currently dominated by the B777-300ER and the B747-8.

While Airbus will likely solve the technical issues associated with manufacturing of the A380, and design a very capable A350, their product strategy lacks consistency, and their mid-term product line-up is very discontinuous. This could prove to be a much bigger issue to their long term viability then sorting out A380 wiring or designing a superb A350.

What's your opinion?

[Edited 2006-10-25 21:04:22]

11 replies: All unread, jump to last
 
User currently offlineAirFrnt From United States of America, joined Jul 2004, 2826 posts, RR: 42
Reply 1, posted (7 years 10 months 1 week 1 day 2 hours ago) and read 6896 times:

Quoting Katekebo (Thread starter):
On the VLA (500+ seat) market

The VLA market is usually defined as 450+, which includes the 747 and the A380.

Quoting Katekebo (Thread starter):

Both manufacturers have the narrowbody market covered with very comparable products and both have expressed their intentions to develop new products for this market as new powerplants become available. Net, the narrowbody market is, and will remain in the future, a very tight competition with nearly 50/50 split.

The narrowbody market may constrict faster then expected if Boeing pushes Y1 closer. All indications are that Boeing is focusing on Y1 rather then Y3 right now.


User currently offlineTangowhisky From United States of America, joined Jun 2006, 912 posts, RR: 7
Reply 2, posted (7 years 10 months 1 week 1 day 2 hours ago) and read 6885 times:

Quoting Katekebo (Thread starter):
My question is - can Airbus effectively cover the entire widebody market needs, all the way from 200 to 500 seats, with only one model.

As long as the A350 is meant as a replacement for the A330 and A340, then the answer is no . Airbus has never made it clear if the A330 and A340 will or will not be offered once the A350 becomes available. But with the pressure the 777 is having on the A340 and the pressure the 787 will have on the A330, I find it hard to believe that Airbus will make the A350 a 777 and 787 killer. ILFCs chief this week was also quoted of saying that the A350 alone will not be able to take on the 777 and 787.

IMO the A350 specs are as fluid as water. There is a lot of marketing campaign by Airbus on the 350XWB in journals, but there is no meat on where this plane will exactly fit in the market, and how it will be competitive. My belief is that Airbus is using the marketing campaigns to try and distract the market away from the 777 and 787 in order to buy time and figure out its 200-450 seat product strategy.

TW



Only the paranoid survive
User currently offlineAdria From , joined Dec 1969, posts, RR:
Reply 3, posted (7 years 10 months 1 week 1 day ago) and read 6812 times:

If the A350 doesn't get delayed to much Airbus will be able to cover the whole 100+seat market. Boeing won't have a good competitor for the A380 leaving Airbus an advantage Boeing had for decades. Airbus could use the A380 to sell some additional A320s or A350s to customers just like Boeing did it with the 747/737...

It is still unclear what the A350 will finally look like and how good it will be able to compete against the 787 and 777. The A380 seems to perform well (based on the fact that no one canceled any orders) but I don't excpect any "big" orders until it's EIS.

So if point-to-point does happen (very unlikely or does here anybody seriously believe that London, Frankfurt or Paris will become regional airports?) Airbus has the A350. Basically the point-to-point "thing" was only a reaction to the A380 (just like the sonic cruiser). But if the VLA market is there (and Boeing also believes it otherwise why built the 747-8?) Airbus has the strongest product in it's class. Airlines like SQ, EK, LH,... do believe in the VLA market...


User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 4, posted (7 years 10 months 1 week 22 hours ago) and read 6752 times:

Quoting Katekebo (Thread starter):
My question is - can Airbus effectively cover the entire widebody market needs, all the way from 200 to 500 seats, with only one model. I don't think so, and it looks to me that Airbus product strategy has two huge holes in it, one on the lower end, leaving the B787-3 and -8 without competition, and another one on the high end of the range, currently dominated by the B777-300ER and the B747-8.

Perhaps they don't need to just yet? Boeing's redifined the market with the twin engine T7 and now the plastic, point-to-point 787. Airbus did it with the A300. Boeing responded a lot later with the 767.

There is a school of thought that says perhaps rather than chase the market, create it.

The later EIS of the 350 may be causing panic to all and sundry but I think it buys Airbus valuable time to see just how well the 787 shapes out before committing to materials, shape and size of plane for their future offerings.

And time is on their side. Boeing can offer very little more in the interim. The carriers that want to buy have bought, the others that haven't but want the plane won't get the numbers they require any quicker than Airbus's XWB arrival even if it came in 2016. Boeing 2nd 787 production line is a plastic pipe dream in my view.

"make hay while the sun shines" That saying works for Airbus today than it does for Boeing (they made their hay getting in the 787 orders). They've defined their plane and are stuck with the design. Airbus can tweak, stretch, prod all in the comfort that any further losses to Boeing are limited because of Boeings success. A fortuitous paradox.

Before anyone says but Airbus isn't making money while Boeing creams it and that Boeing will make even more money when they deliver shed loads of planes in the following years, That is and was always the given the minute the Airbus started on the 350 route. Right or wrong isn't the discussion here, the product strategy is. Taking their time with the 350 is best for their product strategy, with the aim of creating a new category within the widebody market which suits its changing needs.

Will Airbus then ever make more money than Boeing? Will it ever beat Boeing for market share? Not an issue, as that was the Forgeard's focus, perhaps the new skipper is less dogged on these matters but, of course, the aim is always to increase shareholder value. It can still be done by being less than the number 1. Ask Reebok, ask Nissan ask Apple....


User currently offlineStitch From United States of America, joined Jul 2005, 30898 posts, RR: 87
Reply 5, posted (7 years 10 months 1 week 22 hours ago) and read 6716 times:
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Quoting Katekebo (Thread starter):
It looks to me that Airbus product strategy has two huge holes in it, one on the lower end, leaving the B787-3 and -8 without competition, and another one on the high end of the range, currently dominated by the B777-300ER and the B747-8.

The 787-3 will probably be a very niche market, limited to Japan and maybe China and India. Boeing didn't really work the numbers on the 787-3 because they didn't feel the market was there to justify the expense.

It is highly likely Airbus will re-engine the A332 with the GEnx-1A72 and perhaps a bleed-air Trent 1000 (as RR might prefer just to concentrate on the Trent XWB). No, it won't be as good as the 787-8, but the A332 is a solid platform now and new engines and any other enhancements they can add will allow them to sell a dozen or score passenger versions per year, I imagine, in addition to much stronger freighter sales.

As for the upper range of the market, Airbus has mumbled about stretching the A350XWB-1000 to make it a true match for the 773ER and A346 in capacity. Even if they don't, the A350XWB will de-facto replace the A343, A345 and A346 programs. I imagine Airbus will try and re-engine the A333, as well, though the A358 and A359 will probably be chosen instead for the most part.

I don't believe Airbus cares about the 747 part of the market. It's been a deliberate gap in their product strategy under the A340/A380 duopoly and it looks like it will continue under the A350/A380 duopoly. The 747's future is as a freighter. Even if the A380 never sells another frame, I expect most 747 operators will opt for the 773ER/A346/Y3/A3510 then the 748, and I feel confident in believing that the A380 will in fact sell another frame. And another. And another.  Smile


User currently offlineTangowhisky From United States of America, joined Jun 2006, 912 posts, RR: 7
Reply 6, posted (7 years 10 months 1 week 20 hours ago) and read 6637 times:

Quoting Stitch (Reply 5):
It is highly likely Airbus will re-engine the A332 with the GEnx-1A72 and perhaps a bleed-air Trent 1000

 checkmark  The A330 is a very good design and still has life left for many upgrades. With the financial constraints Airbus will have, this will be the right option to go forward for the shorter-medium term against the 787. I'd say an announcement should be nor more than 2 years away.

Quoting Stitch (Reply 5):
As for the upper range of the market, Airbus has mumbled about stretching the A350XWB-1000 to make it a true match for the 773ER and A346 in capacity. Even if they don't, the A350XWB will de-facto replace the A343, A345 and A346 programs.

The A350XWB is 12" less in cross-section against the 777. I am still convinced that they are not firm on the fuselage diameter until they decide what they will do about the widebody twin aisle market. I agree that they will end up positioning the A350XWB right up against the 777, in the same manner they put the A330 against the 767 and took market share from that sector.

Boeing will be busy with the 787 and 748 while Airbus will complete the A380 design, then re-engine and polish the A330 and eventually launch the A350. After all that is done, they will then turn their attention to the A320 / 737 replacements as these two models is what is supporting most of their operating cost requirements.



Only the paranoid survive
User currently offlineER757 From Cayman Islands, joined May 2005, 2510 posts, RR: 7
Reply 7, posted (7 years 10 months 1 week 20 hours ago) and read 6609 times:

Quoting Katekebo (Thread starter):
The A350 instead of expanding Airbus offering, will replace their already best-selling product (A330)

I could be wrong, but I believe the A320 is Airbus' best-seller.

Quoting Tangowhisky (Reply 2):
IMO the A350 specs are as fluid as water. There is a lot of marketing campaign by Airbus on the 350XWB in journals, but there is no meat on where this plane will exactly fit in the market, and how it will be competitive. My belief is that Airbus is using the marketing campaigns to try and distract the market away from the 777 and 787 in order to buy time and figure out its 200-450 seat product strategy.

 checkmark  In light of stories posted today relating to Airbus re-thinking the A350 again, I have to wonder just what exactly they presented to the airlines at Farnborough and what SQ thought they were going to be getting when they "ordered" it there. What Airbus really needs to do is firm the design, launch the product and get moving. They aren't exactly selling a lot of planes recently and you can't sell what isn't launched. With the short-term prospects of additional A380 sales bleak and limited interest in the A330 (the 787 seems to be eating its lunch), Airbus needs to put a product out there in the widebody segment and generate some sales.


User currently offlineKen777 From United States of America, joined Mar 2004, 8223 posts, RR: 8
Reply 8, posted (7 years 10 months 1 week 19 hours ago) and read 6592 times:

Quoting Katekebo (Thread starter):
On the VLA (500+ seat) market, Airbus is the only player.

You may be thinking only of 500+ seating, but I believe that the 748i will be a competitor for Boeing. Airlines that have major 747 fleets will give it a close look and that fact alone is going to cut into 380 gross margins as Airbus is going to need to fight for each order.

The 380 is also going to be a bit large for some routes. If the airlines look at a route and focus on sales in the slower periods then they will be looking at the cost of flying the 748i and 380 when there are only 200 - 350 pax buying tickets. The 748i might look pretty good during those periods.

While sales may be slow for the 748i (as it is a replacement plane) I have no doubts that it will take orders away from the 380 for some years to come.

Quoting Tangowhisky (Reply 2):
My belief is that Airbus is using the marketing campaigns to try and distract the market away from the 777 and 787 in order to buy time and figure out its 200-450 seat product strategy.

Sort of like they did when SQ was hot on the 7E7 and Airbus said to hold off as they were coming out with something better - the 350 v.1. That argument can only be used so many times and the various changes to the 350 program has reduced the times it can be used. (How far has SQ been pushed back, in terms of available slots, because they listened to SQ? What was the cost of missing out on launch discounts?)

In terms of product strategy for the next 5 - 10 years I believe Airbus is going to be forced to develop theirs in response to what Boeing does. An amazing change from 5-6 years ago.


User currently offlineTangowhisky From United States of America, joined Jun 2006, 912 posts, RR: 7
Reply 9, posted (7 years 10 months 1 week 17 hours ago) and read 6518 times:

Quoting ER757 (Reply 7):
relating to Airbus re-thinking the A350 again, I have to wonder just what exactly they presented to the airlines at Farnborough

And I bet you they are still dragging it out and keep customers such as SQ close to the A350 definitions as possible.....you know, the airliner input stuff. But if they drag on too long SQ will call the bluff as........

Quoting Ken777 (Reply 8):
Sort of like they did when SQ was hot on the 7E7 and Airbus said to hold off

 checkmark 

You notice Finnair is now considering 787 discussions? They used to be big on the A350. Unless Airbus comes clean and starts giving out spec information, economics, mission profiles, and cabin configuration data, airlines will lose patience as the A380 in itself is not just costing money to airlines, but it is costing time. In decisions and ambiguity about the A350 can be interpreted the same way.



Only the paranoid survive
User currently offlineGrantcv From United States of America, joined Apr 2005, 430 posts, RR: 0
Reply 10, posted (7 years 10 months 1 week 14 hours ago) and read 6475 times:

In the narrowbody market, there will always be good solid demand regardless of whether Airbus or Boeing develop something new. That part of the market is relatively stable. But, if either A or B pulls the trigger and develops a new entrant, the other one will have to follow suit or lose a big chunk of that market.

The widebody market is much more cyclical with steep ups and downs.

- The lower end of that market is currently up and the brisk sales of the 787 and A330 attest to that. Boeing's timing is good, Airbus is lagging depending on an aging design with the A330 at this point (now that the A350 has gone upmarket)

- The mid-size market is cycling from up to down as airlines finish out their orders for B777s and A340s. In the next decade that part will be quiet until the replacement market kicks in around 2015. So, if this is where the A350XWB will fit, then Airbus have time for delays as they otherwise will be early for the next upturn and could be outdone by the Boeing Y3 when it appears.

- The high end of the market is currently down and will start to pick up in a few years as airlines look to replace their B744s. Here the A380 is too early, despite all the delays, and probably too big for overwhelming success. The B748 seems to be a better response - from and investment and timing standpoint.


User currently offlineTangowhisky From United States of America, joined Jun 2006, 912 posts, RR: 7
Reply 11, posted (7 years 10 months 1 week 8 hours ago) and read 6413 times:

Quoting Grantcv (Reply 10):
The mid-size market is cycling from up to down as airlines finish out their orders for B777s and A340s. In the next decade that part will be quiet until the replacement market kicks in around 2015. So, if this is where the A350XWB will fit, then Airbus have time for delays as they otherwise will be early for the next upturn and could be outdone by the Boeing Y3 when it appears.

Exactly. This is why I believe it is best for Airbus to take its time on the A350. First reason is that there is no real rush, as losing a few more A340 sales against the 777 is not as bad as losing many in about 10 years from now with a better Y3/777 replacement. The 777 technology is late 1980's, and therefore the wildcard is there that if Airbus does not get the A350 right, Boeing will gauge the 777 replacement based on any shortfalls of the A350 and the new technologies of 2010+ including newer engines. The other reason why Airbus should take its time is that as you have said, the lower end of the widebody market sales A330/787 are more stable. Considerng the cash flow issues Airbus is facing, it is best to put its efforts for the time being getting the A380 straight, and modernize the A330 (new engines, aerodynamic efficiency improvements, etc.). The A350 should be launched the same time the 777 is replaced by Boeing, in the same way the A320/737 replacements will most likely be timed.



Only the paranoid survive
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